Genetic Testing and Adverse Selection in Insurance Markets
One of the challenges the non-discrimination bill will face in the 109th Congress is negotiating the potential impact on the insurance industry, as similar legislation did in the 108th Congress (scroll down). Specifically, whether the non-discrimination bill will result in adverse selection, or the situation where insurance companies can’t cover claims because more people with above average risk buy more coverage.
This recent issue of Health Affairs contains an article that takes a closer look at the relationship between genetic testing and the insurance markets. The authors of this article attempt to "gain a better understanding of the extent to which genetic testing precipitates adverse selection or discrimination, or both, in insurance markets." They followed a group of 148 individuals that had taken part in a clinical trial of genetic testing for Alzheimer’s disease. They found that the individuals that tested positive for APOE-e4, an allele that increases the risk for Alzheimers by 2 to 15 fold, were 5.76 times more like to change their long-term care insurance than others. The authors conclude by saying:
"Policymakers who are attempting to balance consumers’ concerns regarding potential genetic discrimination against insurers’ concerns that the withholding of genetic test results would make insurance markets unprofitable should proceed with caution. Our findings imply that the potential for adverse selection may vary considerably by insurance market, thus making it difficult to design a public policy that works in all instances…[P]olicymakers…need to balance considerations regarding consumers’ rights to protect themselves from uncontrollable health risks with the insurance industry’s adverse selection concerns that could affect product affordability."
Cathleen D. Zick, Charles J. Mathews, J. Scott Roberts, Robert Cook-Deegan, Robert J. Pokorski and Robert C. Green. "Genetic Testing For Alzheimer’s Disease And Its Impact On Insurance Purchasing Behavior" Health Affairs, 24(2): 483-490.